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Poland's new law regulating wind farms will hinder growth in renewable energy and endanger the country's ability to reach its binding EU target of producing 15% of its final energy demand from renewables by 2020, rating agency Moody's said Wednesday.

"Poland's new law will likely curb investments in the renewable energy sector. We expect it will result in a tightening of the reserve margin, the amount of electricity generation capacity in Poland above anticipated peak demand, as many of the existing thermal power plants will need to be decommissioned," Joanna Fic, vice president and senior credit officer at Moody's, said in a statement.

Fic said a tightening of the reserve margin will cause wholesale power prices to rise, which will benefit utilities including PGE and Energa.

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On June 22, President Andrzej Duda signed into law new regulations that require new wind farms to be located between 1.5-2km away from residential buildings and protected areas, a move which the Polish Wind Energy Association says would exclude 99% of the country's territory from wind development. The law also recalculates the way both existing and planned wind farms have to pay property tax, which could raise their costs.

Last year wind accounted for 47% of Poland's total renewables production with installed capacity of 5.5 GW.

Transmission system operator PSE estimates that up to 9 GW of onshore wind could be connected to the grid by 2020, so losing that potential would make it hard for Poland to reach its EU renewables target.

Currently Poland produces 13% of its final energy demand from renewables, Moody's said.

"Limiting growth in wind generation will make reaching this target challenging and the ability to deliver on it will depend on the pace of development of alternative technologies, such as biomass and biogas that appear to be promoted by the government," Fic said.

The government is also counting on an upswing in co-firing with biomass, which until a few years ago made up almost half of Poland's RES generation. It recently passed amendments to the RES law that boost subsidies for co-firing.

Separately the utility Energa said late Tuesday it has decided to recognize Zloty 247 million ($61.9 million) in impairment losses on its existing and future pipeline wind projects as a result of the new wind farm law.